[Intl-tobacco] Indonesia: Jakarta Takes First Step to Curb Smoking in Land of the Kretek

[robert weissman]

Jakarta Takes First Step to Curb Smoking in Land of the Kretek

Bloomberg News

January 18, 2006

Jan. 18 (Bloomberg) -- Ari Kurniawan, a smoker since he was 12, says he
won't quit
after Jakarta bans smoking in the city's offices and public buildings
starting next
month.

``I can't change,' said Kurniawan, 34, taking a pull on his kretek, a
clove-flavored
cigarette favored by Indonesians. ``I will smoke someplace else. Everyone is
smoking.'

The ban, which only applies in the capital, is the first attempt to curb
the smoking
habit in the world's fifth-largest tobacco market. Health officials say
that it will
have no effect and that tougher rules are needed to dent rising sales at
producers
such as Altria Group Inc.

Lined up against the reformers are lawmakers, an industry that employs
as many as
400,000 people, and supporters of the kretek, which was introduced more
than a
century ago and accounts for nine out of 10 cigarettes consumed in
Indonesia.

The pungent aroma of kretek permeates Jakarta's hotel lobbies and
restaurants.
Cloves, a spice native to Indonesia, are added to the tobacco, imparting
a sweet
scent and emitting eugenol, a chemical that numbs the effect of smoke in
the throat.


``After decades of permissive smoking in front of other people's noses,
in front of
babies and young children, this is more of a recognition that smoking is
bad for
other people,' said Widyastuti Soerojo, head of tobacco control at
Indonesia Public
Health Association. The Jakarta ban ``is not enough.'

Steep Fines

Under the new rule, Jakarta's offices, restaurants and public buildings
will have to
provide a separate smoking space starting Feb. 4. Smokers and building
managers who
disobey face six months in jail or a fine of as much as 50 million
rupiah ($5,000),
more than four times what the average Indonesian earns in a year.

``The government should educate people about the dangers of smoking
rather than
telling restaurants to ban smoking,' said Puma Rahmadi, a partner at
Banyumas, a
Jakarta restaurant that specializes in barbecued fish. ``Small
restaurants like ours
don't have enough space to implement it. Anyway, I don't expect people
to adhere to
the rule.'

Some lawmakers are proposing a more ambitious bill. They want to ban
advertising and
selling tobacco products to minors. Opposition comes from parliament
members who
argue that stricter rules could cost jobs.

The tobacco industry employs about 400,000 people, according to Ismanu
Sumiran,
chairman of the Indonesian Kretek Producers Association, out of 95
million workers
in Indonesia.

``There should be regulations,' said Andrew White, a director at PT H.M.
Sampoerna,
which is Indonesia's oldest cigarette maker and was bought by New
York-based Altria
last year. At the same time, he said, businesses, hotels and restaurants
``should
have some flexibility on deciding where they do and where they don't
allow smoking.'


Cigarette taxes last year generated about 32.2 trillion rupiah, or 7
percent of the
government's revenue. That may rise to 36.6 trillion rupiah in 2006
after the
government increased retail prices, used as a benchmark for excise
duties, in July.

Crackling Sound

Production of kretek, named after the crackling sound made by the
burning cloves, is
forecast to increase 6 percent this year, Sumiran said. Kretek
cigarettes deliver
more nicotine, carbon monoxide and tar than conventional cigarettes, the
U.S.
Centers for Disease Control and Prevention said in a July 2004 fact
sheet on its Web
site.

The anti-tobacco forces face an uphill battle: The proportion of smokers in
Indonesia rose to 31.5 percent of the population in 2001 from 26.9
percent in 1995,
according to the World Health Organization. That was more than double
the 15 percent
rate in neighboring Singapore, which since then has banned tobacco sales
to people
under 18 and introduced graphic warnings on packages.

Target Markets

Tobacco companies are expanding in nations with less restrictive smoking
policies as
the rules are tightened in countries such as the U.S., the world's
second-largest
cigarette market. Smokers declined to 21.6 of the U.S. population in
2003 from 22.8
percent in 2001, according to the CDC.

Altria, whose Phillip Morris International unit makes Marlboro
cigarettes, completed
the $4.9 billion acquisition of about 98 percent of Jakarta-based
Sampoerna in May.
Sampoerna, founded in 1913, is Indonesia's third-largest cigarette maker.

Altria, the world's biggest cigarette company, spent $300 million in
April to buy
Colombia's biggest tobacco company, Cia. Colombiana de Tabaco. British
American
Tobacco Plc bought Peru's Tabacalera Nacional SAA in 2003 for $37 million.

Indonesia's biggest tobacco company, PT Gudang Garam, is controlled by
Rachman
Halim, the nation's richest man. Unlisted Djarum Group, the
second-largest, is owned
by Budi Hartono. He is the country's second-richest man, according to Forbes
magazine.

Stepped-Up Advertising

The cigarette companies vie for market share with billboards depicting
young, active
men and women dancing or exercising. They also sponsor concerts and
sporting events.


``After the acquisition of Sampoerna, there is aggressive marketing not
only from
Philip Morris but other competitors,' the health association's Soerojo
said.

Tobacco makers focus on recruiting new smokers, said Hatai Chitanondh,
president of
the Thailand Health Promotion Institute, who helped draft Thailand's
tobacco-control
law.

``Tobacco companies lose a lot of customers,' he said. ``A number of
them are
successful in quitting, and older smokers die of smoking-related diseases.'

The average age at which Indonesians start to smoke fell to 18.3 years
in 2001 from
about 19 in 1996, according to WHO. With no restrictions on sales to
minors, many
start much younger.

In Jakarta, 34 percent of students already have smoked cigarettes, and
98 percent of
the rest intend to start, according to the WHO's Global Youth Tobacco
Survey in
2004. In Shanghai, only about 7 percent said they are likely to take up
the habit,
according to a similar WHO survey there.

New Generation

Hakim Pohan, a member of parliament's health commission and vice
chairman of the
Indonesian Forum of Parliamentarians on Population and Development, is
one of those
lobbying for tougher national rules, including a ban on advertising and
sales to
minors and an increase in excise tax on cigarettes to at least 65
percent from as
little as 20 percent.

``The objective is to save the new generation and non- smokers,' he said.

Resistance to change is fueled by the cult status of the kretek, which
has its own
museum in Surabaya, East Java. About 36,000 visitors a year come to
watch cigarettes
being hand-rolled by Sampoerna's skilled female employees.

``All men in my family smoke kretek,' said Kurniawan, who works in the
computer
division of Jakarta-based PT Bakrie Kasei. ``It is an Indonesian icon.
It's like our
identity.'


To contact the reporter on this story:

Arijit Ghosh in Jakarta at aghosh@bloomberg.net;

Wahyudi Soeriaatmadja in Jakarta at wahyudi@bloomberg.net.

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